Former Leicester manager Nigel Pearson thinks the club will keep hold of Jamie Vardy this month and finish in the top four of the Barclays Premier League.

Leicester have been this season's surprise package, transforming themselves under the guidance of Pearson's successor Claudio Ranieri from relegation battlers to title challengers.

Vardy has been instrumental in the Foxes' rise, with his 15 goals making him the division's joint-leading scorer alongside Everton striker Romelu Lukaku.

The 28-year-old's exploits in front of goal have inevitably led to speculation surrounding his future, with Chelsea and Real Madrid reported to be interested in signing him.

But Pearson, the man who signed Vardy for Leicester from Fleetwood for £1million in 2012, believes the player will remain at the King Power Stadium during the January transfer window.

"I would encourage him to stay, but it's not for me to do that," Pearson told BBC Radio 5 live's Sportsweek.

"You've got to protect your own interests, but there comes a point when you have to recognise when to keep hold of a player and when they no longer want to be there. Players have so much power these days and a player's state of mind is key to their performance.

"But I think Vardy will stay there because he's a fantastic lad as well as a player, and they're such a strong group."

Vardy remaining will obviously be key to Leicester's chances of maintaining their position during the second half of the season.

Saturday's goalless home draw against Bournemouth saw the Foxes slip two points behind Premier League leaders Arsenal but Ranieri's side are still second in the table, ahead of Manchester City by one point and seven points clear of fifth-placed Manchester United.

Pearson, 52, thinks Leicester can hold on to a Champions League place.

He said: "The first half of the season shows they are capable.

"I don't see any reason why they can't [stay in the top four]. I think we've seen enough results this year to suggest the sides who have been promoted are doing well and the big guns are not having it their own way."

Asked about returning to management after being sacked by Leicester in the summer, Pearson added: "It will be w hen a job comes a long that suits both parties, which is the most important thing."